My grandparents were married for over 60 years. This year I will celebrate 15 years, so I feel like a mere rookie in this long term journey. We are all familiar with the sad facts of the failure rates of marriages in our country.
Similarly, business partnerships, as well as businesses in general, begin with the odds stacked against them. In a detailed study by the Bureau of Labor Statistics on businesses formed in the 1990’s, 66 percent survived after two years and 44 percent survived after four years. While these are sobering facts, we also know that partnerships can grow to significant heights – Sears and Roebuck, Baskin-Robbins, Hewlett-Packard and Ben & Jerry just to name a few.
As a fundamental principle, the sum of a partnership should be greater than the individual parts. In basic math terms, if 1 +1 isn’t greater than 2 then you really need to question whether the partnership is creating value. There are obviously some pros and cons associated with partnering. Pros include leveraging strengths, sharing risk and enjoying camaraderie, while cons include clashing personalities, unequal contributions and the potential to irreparably injure friendships and family relationships. In fact, oil tycoon John D. Rockefeller said, “A friendship founded on business is a good deal better than a business founded on friendship.”
I have been fortunate to be involved in good partnerships in my career, so I have particular appreciation for those that have utilized partnerships for long term success in business. These type partnerships are more like a marathon than a sprint. One such Mississippi success story is CraftCroswell Inc., a flooring contractor with offices in Ridgeland, Hattiesburg, Biloxi and New Orleans. Brothers Bill and Bobby Croswell teamed up in the early 1970’s at ages 29 and 24, respectively, to form their business. Both were willing to take the risk of pursuing their entrepreneurial dreams of building a great company.
Bill, the elder brother, commented, “Trust has been the foundation of our partnership. Without a deep level of trust, we would never have endured the ups and downs of the business over the last 35 years.” Bill also noted their complimentary skill sets and clear division of responsibility. Bill, who serves as CEO, handles all organizational and administrative matters, and Bobby, the president, is responsible for business development and project installation. While they have long enjoyed a strong, flourishing business, they have experienced unprecedented growth in the last few years during the reconstruction of the Mississippi and Louisiana Gulf Coast. In fact, CraftCroswell was awarded the sizeable contract to repair the Superdome post-Katrina, and locally it recently completed the Jackson Convention Center.
There are some clear principles that apply in exploring how to create successful partnerships. Foundationally, you want to make sure you are “yolking” yourself with someone of integrity and honesty. George Washington aptly stated, “Associate yourself with men of good quality if you esteem your own reputation; for it is better to be alone than in bad company.”
Partners should have a shared vision and mission for the long term plan for the business. This often requires some soul searching to address what each partner really hopes to get out of the venture. Each partner should be honest in assessing his or her own strengths and weaknesses to make sure they are complimentary. Further, the roles and responsibilities should be allocated to leverage those strengths in the operation accordingly. Difficult times should be anticipated on the front end. The key is how the partners will handle adversity and communicate during times of conflict. Accountability is also important to make sure that the partners don’t act as silos in the business, but work to encourage one another and have accountability to achieve stated goals. Last but not least, is to plan for divorce in advance. Much like a pre-nuptial, wise business partners define on the front end how they will wind up their business if it does not work out as planned.
As described above and illustrated by the accomplishments of CraftCroswell, business partnerships can not only beat the odds of survival, but can be a great long-term model for success in business. With wisdom and planning, partners can pool their talents and resources to seize opportunities in the marketplace and potentially build the next great Mississippi business.
Martin Willoughby is a business lawyer in Jackson. He can be reached at email@example.com.